No Deal, Tobacco Giants Declare

Leaders In Congress To Press Legislation

April 9, 1998|By DAVID E. ROSENBAUM The New York Times

WASHINGTON — The chairman of RJR Nabisco, the nation's second-largest cigarette manufacturer, said on Wednesday that his company no longer would work for comprehensive legislation to regulate tobacco and instead would adopt a policy of full-scale advertising and litigation.

The other major tobacco companies, including Philip Morris, the industry giant, followed quickly by announcing that they would take the same approach.

The industry asserts that legislation approved last week by the Senate Commerce Committee would drive companies into bankruptcy.

The bill would not give the companies the protection they want from lawsuits based on smoking-related illnesses.

Many influential legislators said they thought the industry was bluffing, and congressional leaders said they would press ahead with the legislation.

``The public demands action, with or without the industry's support,'' said Sen. John McCain, R-Ariz., chairman of the Commerce Committee.

President Clinton called the industry's position ``a big mistake'' and said: ``We're going to get this done. Now they can be part of it or they can fight it.''

The executive, Steven Goldstone, said, ``There is no process which is even remotely likely to lead to an acceptable comprehensive solution this year.''

His company is the parent of R.J. Reynolds Tobacco Co., which makes Camel and Winston cigarettes, among other brands.

``I have a business to run in an industry on which millions of people depend,'' he said. ``So we will continue to manage our business in the most responsible and competitive way we can.''

Goldstone said that the industry's enhanced advertising campaign would be aimed only at adult smokers.

But the tobacco manufacturers have not conceded that they ever marketed cigarettes to teen-agers.

On Wall Street, the stock prices of all the main tobacco companies rose on Wednesday.

The industry, with its battery of lobbyists and public-relations specialists and deep pockets for campaign contributions, had been advocating congressional approval of the $368.5 billion, 25-year legal settlement the manufacturers and state attorneys general reached last June.

The bill the Senate Commerce Committee approved last week with strong bipartisan support was much tougher on the industry than the June settlement.

Most importantly, the bill, unlike the settlement, would give the tobacco companies no immunity from lawsuits.

It also would raise the price of a pack of cigarettes by $1.10 over five years, much more than the settlement envisioned, and cost the industry more than $500 billion over 25 years.

The dominant view in Congress is that the Senate bill is the baseline and that if a law is enacted, the changes made in the legislative process ahead will probably make the measure even less favorable to the manufacturers.

``With 3,000 children becoming hooked on cigarettes every day, Big Tobacco's decision to pull out of the national tobacco settlement is irresponsible and wrong,'' Sen. Bob Graham, D-Fla., said in a prepared statement.

Graham was in Israel on Wednesday and could not be reached for comment.

``If the tobacco industry is determined to play chicken with Congress while our children's futures are at stake, the House and Senate must be equally determined not to blink,'' the statement said.

One theory among legislators supporting tobacco legislation is that the cigarette makers had learned from the political failure of the June tobacco settlement that their endorsement of any measure amounted to a kiss of death.

They are such pariahs that few legislators can afford to be on their side.

Sen. Kent Conrad of North Dakota, who represents the Senate Democratic leadership on tobacco matters, speculated that the strong stance taken by the cigarette companies on Wednesday was comparable to Brer Rabbit pleading with his captors not to throw him into the briar patch.

Despite the resolve in Congress and the White House to press ahead with legislation, the companies' decision to pull out creates complications.

Congress has the authority to take many of the legislative steps under consideration without the industry's permission.

It can, for example, impose a tax to raise the price of cigarettes and give the Food and Drug Administration broad authority to regulate nicotine as a drug.

It can also appropriate money for anti-smoking commercials and smoking-cessation programs.

But two main parts of the bill approved by McCain's committee are questionable constitutionally without the industry's cooperation. One would put strict limits on cigarette advertising, a possible breach of the First Amendment guarantee of free speech.

The other would force the companies to pay penalties if youth smoking rates did not fall to specified levels, a potential violation of their due-process rights.